NOTE: The Supreme Court is scheduled to open its next Term on Monday, Oct. 6, with oral argument in a major case testing the right of smokers to go to court to challenge claims by tobacco companies that the health risk is less in using so-called “light” cigarettes (Altria Group, et al., v. Good, et al., 07-562).  On June 18, the federal government — the Justice Department and Federal Trade Commission — lined up on the side of the smokers. Now the FTC has gone further.

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For 42 years, the government’s main regulator of business conduct, the Federal Trade Commission, has had a general policy against challenging cigarette-makers for marketing their products with claims that an FTC test shows that “light” cigarettes — “low in tar and nicotine” — pose lesser health hazards.

That policy forms a significant legal foundation for the now-pending Supreme Court appeal by a leading company, Philip Morris USA Inc., and its parent, Altria Group.  Three weeks ago, the FTC, joined by the Justice Department, told the Supreme Court that Philip Morris was exaggerating the scope of the policy as it tried to head off damage lawsuits in state courts by smokers of “light” cigarettes.  (The federal brief is here.

Then, on Tuesday, the FTC took a new step: by a 4-0 vote, it proposed to nullify the policy, asking for public reaction to withdrawal of its 1966 “guidance that it is generally not a violation of the FTC Act to make factual statements of the tar and nicotine yields of cigarettes” when those statements are based on tests using what is called “the FTC Test Method.”  (An FTC press release making the announcement is here, and the formal Federal Register notice can be read here.)

The notice commented: “For some time, the Commission has been concerned that the machine-measured yields determined by the Cambridge Filter Method ['the FTC Method'] may be misleading to individual consumers who rely on the yields as indicators of the amount of tar, nicotine, and carbon monoxide they actually will get from smoking a particular cigarette.  In fact, the current yields tend to be relatively poor indicators of tar, nicotine, and carbon monoxide exposure, and do not provide a good basis for comparison among cigarettes.”

If it opts, after public comment due by Aug. 12, to withdraw its prior “guidance,” the agency said, “advertisers should not use terms such as ‘per FTC Method’ or other phrases that state or imply FTC endorsement or approval of the Cambridge Filter Method or other machine-based test methods.”

In the pending Altria Group appeal in the Supreme Court, the “Cambridge Filter Method” — or “FTC Test” — is directly at issue.  The company argues that FTC policy actually requires tobacco companies to disclose tar and nicotine yields based on the test, and that the FTC has authorized the companies to advertise cigarettes by using words such as “light” as short-hand ways of referring to the test results.

 Because of these FTC “mandates,” as the company calls them, federal policy on cigarette marketing of “light” cigarettes bars states from allowing lawsuits in their courts challenging the use of such words or phrases, the appeal contends.

 The specific case before the Court involves three former smokers of Philip Morris’s Marlboro Light or Cambridge Light cigarettes. Based on a Maine deceptive practices law, their lawsuit — allowed to go forward by the First Circuit Court — contends that the company deceived them into using “lights” so that they would get lower tar and nicotine yields that, in fact, they would not get.

There is a conflict among Circuit Courts on the preemption issue, and that is probably why the Supreme Court on Jan. 18 agreed to hear the appeal in the First Circuit case.  Dozens of other cases are pending in state courts, seeking what Altria Group asserts are”billions of dollars in potential liability.”

In the federal brief filed last month, the U.S. Solicitor General’s office in the Justice Department, joined by the FTC, directly disputed the tobacco company’s claim that its ads on “light” cigarettes were the result of FTC “mandates.”

The Commission’s policy, in 1966 and since, has never required the companies to use ads that refer to the yields from the FTC Test, and has not authorized them to use “light” or other descriptive phrases as short-hand indications of the Test’s results.

The company’s claim that state court lawsuits are preempted by FTC policy, the brief said, “should be rejected because it is based on a mischaracterization of the scope and effect of FTC’s actions concerning cigarette advertising.”  The FTC, the brief added, does not view state court lawsits like the one in Maine “as undermining the FTC’s policies in any way.”

Current FTC policy, the government agencies said, does not require ads’ disclosure of tar and nicotine levels in the Test, and the agency has never explicitly authorized the companies to use “light” or “lowered tar and nicotine” in their marketing.

In announcing its possible withdrawal of its 1966 policy, the FTC noted that the companies have used terms such as “light” or “ultra low” based on Test results.  But, it added, it “has not defined those terms, nor provided guidance or authorization as to the use of descriptors.”  Since it has “no Commission enforcement policy” on such words or phrases, it noted, its proposal “does not address the use of descriptors.”  Thus, it would be limited to changing the guidance on ads that indicate that the claims are based on the FTC Test.

The Solicitor General’s office on Tuesday notified the Court, by letter, of the FTC’s new proposal to drop its 1966 policy. Attached to the letter was the Commission’s Federal Register notice of its plan.

The tobacco company has gained added time, until Aug. 11, to file its reply brief; that will provide a chance to challenge not only the government brief, but also the impact, if any, of the FTC’s new approach.

Posted in Altria Group v. Good, Uncategorized